The number of Welsh businesses in ‘significant’ distress has continued to fall in the past year, seeing an annual decrease of 3.8% to 18,522 according to the latest figures from Begbies Traynor’s Red Flag Alert, which monitors the financial health of UK companies.
In contrast, despite Wales being the only country in the UK to see a decline in ‘significant’ distress, the number of businesses in ‘Critical’ distress has soared 69.8% year-on-year to 1,445.
Hardest hit industries showing the highest numbers of ‘significant’ distress in Wales were Construction (+2.6%, Q3 2025 – 3,113) and Real Estate and Property (+20.3%, Q3 2025 – 2,118). However, among the industries that fell in ‘significant’ distress during the past year were Industrial Trasport and Logistics (-17.4%, Q3 2025 – 418), in addition to General Retailers (-25.3%, Q3 2025 – 1,214), Food and Drug Retailers (-9.5%, Q3 2025 – 679), despite widely reported difficulty for the retail sector.
Additionally, major cities across Wales saw their businesses struggle with year-on-year increases in ‘significant’ distress in Cardiff (+17.1%, Q3 2025 – 2,510), Swansea (+12.3%, Q2 2025 – 595), Newport (+6.2%, Q3 2025 – 1,179) and Bangor (+11.4, Q3 2025 – 429).
Huw Powell, Partner at Begbies Traynor in Cardiff, said:
“Businesses in Wales are still having to confront and overcome an array of challenges including low consumer confidence, rising costs and global economic changes. However, despite uncertainty it is promising to see their resilience with a continued reduction in the past year in the number of businesses experiencing ‘significant’ distress. The sharp increase in the number of businesses in ‘critical’ distress cannot be ignored, however, and leaders in this position will need to seek help.
“When facing uncertainty, businesses feeling the pressure often have options if leaders are able to assess their past, present and future income streams and confront the first signs of distress. Though it has been promising to see the rate slowing this quarter, we may continue to see businesses, particularly SMEs, seeking restructure, refinance or an exit. This means surviving and thriving companies have an opportunity to pick up business left and strengthen or diversify their own offering, while giving ideas, assets and talent a second chance through acquisition and rescue.
“The coming months will be testing for businesses in Wales, but it is evident that there are very talented and experienced leaders guiding them, which should lead to being able to seize great opportunities.”
